Ascent Capital, a private equity firm headed by former Centum executive David Owino, has raised Sh4.38 billion ($50 million) out of the targeted amount of Sh6.14 billion ($70 million) for its debut fund.
The former head of private equity at the Nairobi Securities Exchange (NSE)-listed Centum said most of the cash was raised from local pension funds. The private equity firm said that it plans to invest in fast-growing small and mid-size enterprises (SMEs) in the region through its Ascent Rift Valley Fund.
“Ascent Rift Valley Fund (is) to be invested in growth enterprises in Kenya, Uganda and Ethiopia,” said the firm yesterday in a statement.
The PE fund will invest between $1 million (Sh87 million) and $10 million (Sh870 million) in each business. The fund has a 10-year life which means that Ascent Capital has to find companies, grow them and sell them between now and 2024.
Private equity firms do not keep the money in their accounts but only draw funds from investors when an opportunity comes and only after they are given permission by the fund’s board, which in this case is the pension funds that have invested in Ascent Rift Valley Fund.
Mr Owino said in a previous interview that the firm had already identified an investment opportunity in an Ethiopia-based hospital.
Private equity firms make revenues from charging a management fee and a carry interest, a form of a bonus that is earned should the private equity firm achieve the rate of return set by the investors. Ascent Capital’s preferred exit route is through public listing and selling its investment to other PE funds or investors.
Guy Brennan, an Australian investment banker, and former Nokia executive Lucas Kranck are the other partners in Ascent Capital.
Former TransCentury chief executive Tony Wainaina and Ayisi Makatiani are other locals who have set up private equity firms (Fanisi Capital). Fund raising activity has picked up this year as firms become more confident in finding SMEs that are rough diamonds that need the right cuts to make them sparkle.
Kibo Capital Partners has raised Sh4.38 billion for its second SME fund, while French private equity firm Amethis raised Sh30 billion. Amethis has a stake in Chase Bank worth Sh920 million.